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The Effects of Health and Health Shocks on Hours Worked

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Author Info

  • Cai, Lixin

    ()
    (Melbourne Institute of Applied Economic and Social Research)

  • Mavromaras, Kostas G.

    ()
    (NILS, Flinders University)

  • Oguzoglu, Umut

    ()
    (University of Manitoba)

Abstract

We investigate the impact of health on working hours in recognition of the fact that leaving the labour market due to persistently low levels of health stock or due to new health shocks, is only one of the possibilities open to employees. We use the first six waves of the HILDA survey to estimate the joint effect of health status and health shocks on working hours using a dynamic random effects Tobit model of working hours to account for zero working hours. We follow Heckman (1981) and approximate the unknown initial conditions with a static equation that utilizes information from the first wave of the data. Predicted individual health stocks are used to ameliorate the possible effects of measurement error and endogeneity. We conclude that overall lower health status results in lower working hours and that health shocks lead to further reductions in working hours when they occur. Estimation results show that the model performs well in separating the time-persistent effect of health stock (health status) and the potentially more transient health shocks on working hours.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3496.

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Length: 24 pages
Date of creation: May 2008
Date of revision:
Publication status: published in: Health Economics, 2013, [Online First]
Handle: RePEc:iza:izadps:dp3496

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Keywords: Tobit estimation; health shocks; health; working hours;

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References

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  1. Richard Disney & Carl Emmerson & Matthew Wakefield, 2003. "Ill health and retirement in Britain: a panel data based analysis," IFS Working Papers, Institute for Fiscal Studies W03/02, Institute for Fiscal Studies.
  2. Oguzoglu, Umut, 2007. "Dynamics of Work Limitation and Work in Australia," IZA Discussion Papers 2867, Institute for the Study of Labor (IZA).
  3. David Haardt, 2007. "Transitions Out Of and Back To Employment among Older Men and Women in the UK," Social and Economic Dimensions of an Aging Population Research Papers, McMaster University 197, McMaster University.
  4. Mark Wooden & Robert Drago, 2007. "The Changing Distribution of Working Hours in Australia," Melbourne Institute Working Paper Series, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne wp2007n19, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  5. John Bound & Michael Schoenbaum & Todd R. Stinebrickner & Timothy Waidmann, 1998. "The Dynamic Effects of Health on the Labor Force Transitions of Older Workers," NBER Working Papers 6777, National Bureau of Economic Research, Inc.
  6. Brenda Gannon & Brian Nolan, 2004. "Disability and Labour Force Participation in Ireland," The Economic and Social Review, Economic and Social Studies, Economic and Social Studies, vol. 35(2), pages 135–155.
  7. Dean R. Hyslop, 1999. "State Dependence, Serial Correlation and Heterogeneity in Intertemporal Labor Force Participation of Married Women," Econometrica, Econometric Society, Econometric Society, vol. 67(6), pages 1255-1294, November.
  8. Gerdtham, U. -G. & Johannesson, M. & Lundberg, L. & Isacson, D., 1999. "A note on validating Wagstaff and van Doorslaer's health measure in the analysis of inequalities in health," Journal of Health Economics, Elsevier, Elsevier, vol. 18(1), pages 117-124, January.
  9. Nicole Watson & Mark Wooden, 2004. "The HILDA Survey Four Years On," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 37(3), pages 343-349, 09.
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Cited by:
  1. Mavromaras, Kostas G. & Polidano, Cain, 2011. "Improving the Employment Rates of People with Disabilities through Vocational Education," IZA Discussion Papers 5548, Institute for the Study of Labor (IZA).
  2. Fernández-Val, Iván & Savchenko, Yevgeniya & Vella, Francis, 2013. "Evaluating the Role of Individual Specific Heterogeneity in the Relationship Between Subjective Health Assessments and Income," IZA Discussion Papers 7651, Institute for the Study of Labor (IZA).
  3. Volker Grossmann, 2011. "Do Cost-sharing and Entry Deregulation Curb Pharmaceutical Innovation?," CESifo Working Paper Series 3439, CESifo Group Munich.
  4. Jones, Melanie K. & Mavromaras, Kostas G. & Sloane, Peter J. & Wei, Zhang, 2011. "Disability and Job Mismatches in the Australian Labour Market," IZA Discussion Papers 6152, Institute for the Study of Labor (IZA).
  5. Manoj K. Pandey, 2013. "Elderly's Health Shocks and Household's Ex-ante Poverty in India," ASARC Working Papers, The Australian National University, Australia South Asia Research Centre 2013-01, The Australian National University, Australia South Asia Research Centre.

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